Legendary investor Warren Buffett has described the US Federal Reserve Bank as “the greatest hedge fund in history" because of the revenue its bond-buying program has been generating for the US government, Bloomberg reports.

Mr Buffett told students at Washiongton’s Georgetown University the central bank was generating “$80 billion or $90 billion a year probably" in revenue for the US government, “and that wasn’t the case a few years back."

Buying $US85 million of bonds a month has increased the Fed’s balance sheet to more than $US3 trillion, and payments to the US Treasury Department have grown accordingly: last year, the central bank remitted $US88.4 billion.

The Fed “is under no pressure, none whatsoever to have to deleverage," Mr Buffett said. “So it can pick its time, and if you have somebody wise there – and I think Bernanke is wise, and I certainly expect his successor to be – it can be handled. But it is something that’s never quite been done on this scale. It will be interesting to watch."

“He says he’s going to keep doing it until he sees more improvement in the economy, and I think he’s been mildly disappointed – not hugely disappointed – in the rate of improvement in the economy in the last few years.

“He’s not pre-judging exactly when it’s going to happen, he’s telling you the conditions under which he’ll change."

Mr Buffett also said he wanted Mr Bernanke to stay on as Fed chairman.